EU trims economic growth forecasts amid trade tensions

BRUSSELS (AP) – The European Union (EU) said yesterday it has trimmed its forecasts for economic growth next year as global trade tensions weigh on the bloc’s export-focussed manufacturers.

The EU executive commission reduced its forecast for next year for both the 19-country eurozone and the 27 countries that are due to remain in the bloc after Britain leaves, which is scheduled to happen at the end of October.

Eurozone growth is expected to pick up from 1.2 per cent this year to just 1.4 per cent in 2020, down from a previous estimate of 1.5 per cent. Growth in the EU – without Britain – is forecast to rise from 1.4 per cent to 1.6 per cent next year, down from the 1.7 per cent estimated previously.

European Commissioner in charge of economic affairs Pierre Moscovici, said there were risks to the region and highlighted “growing trade tensions”.

“A couple of sectors have been hit hard: external trade and manufacturing,” he said while presenting the EU’s interim forecast.

He said that growth was being supported by a strengthened labour market, but there is still a risk that the economy might do worse than forecast due to “any further escalation of trade tensions”.

The United States (US) government has imposed tariffs on several countries, including EU states but particularly China. The battle between the US and China has weighed on business sentiment around the world and also has knock-on effects on European businesses, which produce and sell in each of those markets.

European Commissioner for Economic and Financial Affairs Pierre Moscovici, left, speaks with European Commissioner for Migration and Home Affairs Dimitris Avramopoulos during the weekly college meeting at EU headquarters in Brussels. – AP